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Housing Collapse 2010?

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Will we see the start of another housing collapse before the end of 2010?  That is what a number of top economists are beginning to fear.  The truth is that there are some very troubling signs in the housing numbers.  The massive tax credit that the U.S. government was offering to home buyers helped prop up the housing market for quite a while, but now that the tax credit has expired, many real estate professionals are bracing for the worst.  The reality is that foreclosures continue to set all-time records, the mortgage industry is a complete mess and another massive wave of adjustable rate mortgages is scheduled to reset in 2011 and 2012.  As the U.S. economy continues to falter, and as the nation starts to deal with the economic fallout from the Gulf of Mexico oil spill, many are now wondering how in the world Americans are going to be able to afford to purchase millions of these homes which are still massively overpriced.  The American Dream is still way too expensive for the vast majority of Americans.  So are there signs that housing prices in the U.S. could be on the verge of another major decline?

Well, yes.

The truth is that massive U.S. government intervention helped stabilize U.S. housing prices for a while, but the tax credit expired at the end of April.  As home buyers rushed to finalize their purchases in March and April it made the housing numbers look promising for a couple of months, but now things are rapidly becoming unglued again.  We’ll get to the statistics in a moment.

But first it is important to note that mortgage institutions have been seriously tightening their lending standards over the past couple of years.  The days when virtually anyone could easily get approved for a huge home loan are long gone.  The surviving lenders have been burned way too often and they have learned some very hard lessons.  They are scrutinizing mortgage applicants much more thoroughly now.

So why is that important?

Well, when you have less loan applicants being approved that means that you have less potential buyers in the marketplace.  Less potential buyers means that there is less demand for homes.  When there is not a lot of demand, prices go down.

Of course short-term demand had been artificially inflated by the huge tax credit that the U.S. government was offering to home buyers.  But now that the tax credit is over, the numbers tell us that the housing industry could be in for some very hard times…

-Newly signed home sale contracts dropped more than 10% in May.  Some analysts are warning that this could just be the very beginning of a new string of monthly declines.

-Internet searches on real estate websites are down approximately 20 percent compared to this same time period in 2009.  If people are not looking for homes it is because they don’t plan to buy any time soon.

-According to the U.S. Commerce Department, housing starts in the United States fell 10 percent in May, which represented the biggest decline since March 2009.  Not only that, but the data also revealed that single-family home starts suffered their biggest drop since 1991.  Considering that there is a record number of unsold homes right now in the U.S., it is extremely unlikely that things will turn around for home builders any time soon.

-The number of U.S. home foreclosures set a record for the second consecutive month in May.  This is a clear sign that the very worst of the U.S. housing crisis is not in the past.

-As of March, U.S. banks had an inventory of approximately 1.1 million foreclosed homes, which was up 20 percent from a year ago.  The fact that the backlog of unsold foreclosed homes is still growing has got to be extremely troubling for the entire U.S. real estate industry.

-The Mortgage Bankers Association recently announced that over 10 percent of all U.S. homeowners with a mortgage had missed at least one payment during the January to March time period.  That was a new all-time record and was up from 9.1 percent a year ago.

-On top of everything else, a massive “second wave” of adjustable rate mortgages is scheduled to reset in 2011 and 2012.  This means that even more U.S. homeowners are not going to be able to afford their mortgages and there are going to be even more foreclosures.

-Authorities now tell us that the cost of fixing Fannie Mae and Freddie Mac, the government-backed mortgage companies that purchase or guarantee the vast majority of all U.S. home loans, will be at least $160 billion and could grow as high as $1 trillion.  Without Fannie Mae and Freddie Mac, the entire U.S. mortgage industry would simply collapse.  So it is a really troubling sign to see that they have become giant money pits that require constant infusions of U.S. government cash just to survive.

-In fact, Fannie Mae and Freddie Mac are scheduled to be delisted from the New York Stock Exchange because their stock prices have been trading under $1 per share for more than 30 trading days.  That is how far they have fallen.

The frightening thing is that the economic effects from the Gulf of Mexico oil spill have barely been felt yet.  The disaster in the Gulf threatens to push that entire region into a devastating depression, and the economic shockwaves from the oil spill are surely going to be felt from coast to coast.  Considering the fact that the U.S. housing industry is already on the verge of a major crisis, the last thing it needed was a disaster of this magnitude.

So, no, things are not going to be getting better for the U.S. housing industry.  Anyone who thinks so is seriously deluded.

Austin Coins

  • Greg

    We are in difficult times. I don’t know how I could cope with the constant tumultuous events if I did not know that the one who created the world holds me in his hand and knows exactly what is happening. Nothing will happen before God allows it, but it appears the curtains are closing on the age of man’s rebellion against God. Come quickly Lord Jesus.

  • Brian

    Believe me, we have a lot of deluded people that are willing to believe pretty much whatever the government or the corporate media (a propaganda tool of the government) tells them.

  • I agree with Greg on this one! Thank you Greg!

  • Armageddon Thru To You

    I concur with Greg. The world is dead asleep to what’s happening, including much of the Church. Bible prophecy is being fulfilled all around us, but the masses are blinded. Most don’t understand that the stories in the bible are prophetic typologies and dress rehearsals of coming events, that the days of a particular month in the year are mentioned because they represent prophetic Feast days on the Hebrew calendar, and on and on. The bible is nothing like the compilation of unrelated ancient stories that atheists and the secular crowd want you to believe.

    For those who want to know Christ and study bible prophecy, I suggest these sites…

    http://gracethrufaith.com/
    http://www.lamblion.us/
    http://joelstrumpet.com/
    http://pub48.bravenet.com/forum/static/show.php?usernum=4086901292&frmid=13
    http://newine.wordpress.com/
    http://www.bible-prophecy-today.com/
    http://www.lookupfellowship.com/

  • Greg

    A lot of people write comments with the mindset that we can influence our current politicians or that we can elect new leaders and get things to be different. It is my belief that failure to understand why people do what they do will result in futile attempts to change things. Be willing to think outside of your box. Consider the fact that there are billions of people in the world and that a lot of people have different ideas and objectives than you. Be willing to accept that agendas drive actions. I especially write this to the atheists and agnostics, not to convert you to any belief, but to get you to see why we are being put through this chaos.

    For example, we know that Muslims are taught in the Koran (Surah 9) that the only way to be assured of entering paradise is to murder what they call infidels. They define infidels as Jews first, Christians second and anyone else who does not worship the demon-god Allah third. Regardless of what you believe, billions of Muslims do believe the Koran is inspired by god and understanding their belief will help you to understand why they do what they do. You know that many children believe in Santa Claus and that belief causes them to take certain actions to bring about their desired outcome. Your beliefs about and mockery of religious beliefs and children who believe in Santa Claus have no impact on what people do who believe in those things.

    Likewise, there are many people who believe that there will be a messiah that is going to make the world a perfect place. This messiah is not the Christian messiah who came into the world and will return again. This new messiah is sought by many groups and people who believe that certain things must be done before their messiah will come onto the world scene. Those requirements include bringing chaos and genocide into the world so that the old ways can be torn down and the new world order implemented. America was used mightily in that plan to bring in the NWO and that plan also calls for America to be brought down and to be melded into the North American Union. That process is underway and you are not likely to stop it.

  • Raymer

    Greg, the Koran is not the only book that teaches people to kill infidels. The Old Testament of the bible does the same thing. God commanded the Israelites to kill is his name. You religious people are deluded into thinking that there is a such thing as the rapture. When the dollar goes into crisis mode, people will be killing each other and Jesus won’t be around to rapture anyone.

  • Roy

    That the US has been on the hit list is obvious. Now, we have 15 to 20 million illegal aliens who want to belly up to the public welfare trough and are determined to do it. We have a permanent unemployed class who will demand benefits and will get them for years to come. Some of these folks may never work again. We have millions of boomers who are about to receive their social security benefits. Things are looking grim. Crank up up the printing press and keep that money coming President Bernanke.

    What we need is a miracle! And I don’t think the Majestic JC is interested in bailing out a bunch of abortionists and Homoreptilians.

  • Greg

    Raymer – People are completely free to hate God, pretend he doesn’t exist, etc. What I strive to counter, however, is the disinformation that is so prevalent which causes many to make decisions that they may not otherwise have made. The Old Testament is completely different than the Koran in what it teaches and in what God directed the Israelites to do. When God sent them into the lands they were to possess he did direct them in some instances to kill every inhabitant but that was because of what they were doing, not because of who they were. They were offering their children as sacrifices to Molech and committing numerous other abominations against God. That use to bother me as to why God would have directed this extermination but after seeing our nation and other wickedness in the world, I see that when people get to a certain point there is no possibility of them ever changing. For example, the US will never stop murdering babies – our own Molech worship. San Francisco will never stop being as despicable as Sodom. People get to a point where even God’s mercy can’t reach them.

    The Koran directs the followers of the demon-god they worship to kill Jews simply because they are Jews and to kill Christians simply because we worship the King of the Jews. It then directs them to kill every other person who does not worship their demon-god. You will not find in the Old Testament where God directed any peoples to be killed for not worshipping him or because they were of any ethnicity. In fact, that clearly reveals that Allah is not the creator because that demon-god is demanding those who follow him to exterminate one of the created races. Such motivations to exterminate a race of people simply because of their race are not of God but are of Satan.

    Regarding the rapture, it is mostly a nonissue because the Bible makes it clear that Christians will be overcome by the Satanic forces in the tribulation and are going to suffer beheadings in large numbers (hmmmm, which religion hates Christians and loves decapitation?). So if that interpretation of a rapture is correct, Christians should not count on escaping the upcoming tribulation.

    So Raymer, go ahead and hate God but don’t intentionally mislead people into going to hell with you. If they want to go there based on facts, fine. If they are deceived into going there, that is the real pity.

  • Rick

    A large part of the problem with housing in the US is based on the faulty assumption that everyone should be a homeowner. Many people have neither the job stability nor the responsibility to own a house. The government keeps trying to foster the idea that we all should own a house but a large number of people will only be renters. Putting so much emphasis on owning a home has put a lot of people in a situation that will have a poor outcome.

  • Elise

    Greg,

    I see where you are coming from, but re-read Raymer’s comment, and perhaps you will realize that he was not spitting on God in any way, shape or form. Just because someone doesn’t endorse a religion doesn’t mean he doesn’t believe in God, or lacks any kinds of spiritual beliefs. Religion does not have “exclusivity” on beliefs, God, or anything that shapes our values. He was merely expressing that religion has nothing to do with the economic crisis, and everything to do with the system that has failed us, and no, Jesus will not come down to save us all.

    I don’t think that you should be preaching left and right about religion on a board about politics and economy, it just has nothing to do with it. I respect all religions and none are better than others, just some are right for specific people and their cultural background. To each their own. If you feel the need to express those thoughts, I believe there are plenty of websites out there that are more related to your train of thought, and where people will be more open and receptive to it.

    As to the subject at hand, I wonder how low can prices really go down on houses, in the end, there is always a minimal retail value dictated by materials, and I can’t fathom how it can go lower, except certain areas (like downtown areas of large cities). In Canada, prices are still going up and there is now a huge gap in value between both countries. A lot of people think there will be a similar bubble burst in the next 1-2 years, and seeing a possible second outburst in the US will probably aggravate the situation north of the border. Personally, my boyfriend and I are still renting even if we can easily afford a house, just because we know the market is bound to burst. No way a 60 years old bungalow in the Montreal area should be worth 300-400k. And Montreal isn’t the worst; Toronto and Vancouver are the worst by far. Seems like even as neighbors Canada isn’t waking up to smell the coffee; people are still buying at top price, and banks are loaning away based on ridiculously low standards. Thank God some people are smelling the gas before the fire starts.